Secrets of being a successful entrepreneur

In going through the Inc. 5000 list of fastest growing companies, I'm struck by how many of them are based in Southern California and how many of them enjoyed stunning growth between 2008 and 2011 (the period covered in the survey). Last week, I mentioned L.A.-based Nasty Gal, which was the fastest growing local company - and 11th on the entire Inc. list - but there are scores of other impressive businesses. Among them: a Pasadena-based marketing and advertising firm called RateSpecial Interactive, a financial services company in Newport Beach called Jackson Hunter Morris & Knight, and a distributor of remote control toys in El Monte called Xenon Project International. And those are just a few of the ones I saw on page 1 of a 51-page list. As noted on this week's Business Update on KPCC, you don't have to be the next Mark Zuckerberg to find success (judging by Facebook's stock price, you probably don't even want to be the next Mark Zuckerberg).

Steve Julian: But don't most start-up ventures fail?

Mark Lacter: They do - failure rate is about 80 percent for first-time entrepreneurs . What's interesting is that the business start-up rate has remained pretty constant both in good years and bad years. What varies quite a bit is the backgrounds of the people involved. It turns out that the highest rate of entrepreneurial activity involves the 55-to-64 age bracket. One study I saw showed that a large percentage of successful entrepreneurs start businesses as kids. And despite the success of Nasty Gal, only about one-third of all startup owners are women.

Julian: What do successful entrepreneurs have in common?

Lacter: Steve, they all have a willingness to go into battle no matter what the overall economy is doing. Matter of fact, most of them say that taking risks is more important than avoiding mistakes. In general, entrepreneurs are okay with the possibility of being broke at some point in their careers - it's really part of the deal. That's why the folks who do make it big tend not to go wild and crazy by buying fancy houses and cars. They usually manage their money quite well - and they're also good planners. You know, I'm always amazed at how many people think they'll miraculously stumble into a successful situation just because they want to start a business.

Julian: Any other qualities?

Lacter: It helps if you're a shameless self-promoter (that's more important now than ever before because there is so much competition for everyone's time and money); and maybe most important, you have to project a positive attitude to both the people who work for you and the customers who do business with you. Sounds simple enough. But just try keeping a smile on your face when you have to meet payroll when there's no money in the bank.

Los Angeles, of course, has long been an entrepreneurial capital - as well as a little-noticed tech center. Nate Redmond, managing partner of Rustic Canyon Partners, an early-stage venture firm, is starting to notice. From a piece he wrote on Forbes.com:

Southern California has long been a place where independent minds come together to collaborate and create, where visionary entrepreneurs build lasting companies. We've seen it in aerospace, apparel, and entertainment and now increasingly in technology. The innovative thinking and design talent has found an outlet in the Internet to impact a new set of industries, including commerce, games, video, and data.